PCAOB Sanctions Two Firms and Eight Individuals for Violations Including Quality Control Deficiencies and Misleading Inspections Staff, Recognizes Firms’ Extraordinary Cooperation
The Public Company Accounting Oversight Board today announced the settlement of disciplinary proceedings against Deloitte Korea (Deloitte Anjin LLC) and two of its associated persons, as well as BDO Mexico (Castillo Miranda y Compañía, S.C.) and six of its associated persons.
The PCAOB’s orders impose sanctions based on improper alterations of audit documentation in anticipation of PCAOB inspections as well as related quality control violations concerning integrity and audit documentation. In both matters, the Board recognized the firms’ extraordinary cooperation. BDO Mexico’s and Deloitte Korea’s cooperation included conducting internal investigations and sharing the factual results of those internal investigations with Board staff. Deloitte Korea also self-reported misconduct and undertook personnel- and policy-related remediation. As stated in its 2013 policy statement, the PCAOB recognizes extraordinary cooperation for timely and voluntary self-reporting, taking remedial or corrective action to reduce the risk of similar violations recurring, and providing substantial assistance in the PCAOB's investigative processes.
“The integrity of the PCAOB inspections process is crucial to our ability to execute our statutory mandate,” said PCAOB Chairman William D. Duhnke. “We will continue to hold firms and their associated persons accountable if we uncover an attempt to manipulate that process through altering documentation. These two matters also underscore the importance of the Board’s extraordinary cooperation policy, which allows us to more effectively and efficiently investigate misconduct.”
In the Deloitte Korea matter, two former partners of the firm—Seul Hyang Wee and Hyun Seung Lee—were sanctioned due to their role in overseeing the engagement team that backdated work papers and altered hardcopy work papers after anticipating its largest issuer audit would be selected for PCAOB inspection in 2014. Both Wee and Lee participated in the backdating and were aware of engagement team efforts to alter hardcopy work papers, but did not disclose that information to PCAOB inspections staff.
In the BDO Mexico matter, the firm and six partners of the firm—Ignacio García Pareras, Juan Martín Gudiño Casillas, Luis Raúl Michel Domínguez, Juan Francisco Olvera Díaz, Carlos Rivas Ramos, and Bernardo Soto Peñafiel—were sanctioned for participating in, directing, or contributing to the improper alteration of audit documentation. The Board also found that four of those partners—Gudiño, Michel, Olvera, and Soto—provided misleading information to PCAOB inspectors during the Board’s 2017 inspection of the firm.
The PCAOB oversees auditors' compliance with applicable laws, rules, and standards. For more information on our enforcement matters, please visit the enforcement page on our website. Our Tip & Referral Center is also available for firms or individuals to report suspected misconduct by auditors, or to self-report possible misconduct.